Overview of import and export tax in Vietnam

Market Information
icon date25/07/2023

What is import and export tax in Vietnam? Advantages and limitations of this tax for Vietnamese businesses, let’s find out.

What is import and export tax?
Currently, there are many different interpretations of the concept of import and export tax, but to have the most objective view, we offer the following concept: an indirect tax to collect goods that are allowed to be imported into Vietnam.
Objects subject to import and export tax are all specific objects that are bought, sold, exchanged or donated from Vietnam to other countries or from abroad to Vietnam.
Advantages of import and export tax law in Vietnam
Since our country implemented the policy of opening up and integrating into the world economy, it has brought about many significant improvements, making positive contributions to the general import and export tax policy of the whole region and the world.
The advantages of import-export tax law in Vietnam are shown specifically and clearly as follows:
Firstly, the import and export tariff has been built on the basis of the list of the World Customs Cooperation Council.
This has created a favorable first step for the classification of goods based on the structure and characteristics of the goods. Through that, it contributes to making the import-export tax policy in line with international practices.
Secondly, the system of policies and management mechanisms in the field of import and export has been improved and upgraded in the direction of simplicity and openness, which has a positive impact on accelerating production to increase rapidly, serving well for production and people’s life. At the same time, import and export turnover is increasing.
Third, when import and export taxes in Vietnam were issued, the export market was expanded more than before. It can be said that the import and export tax policy has had a positive impact on the management of import and export activities.
Thereby, expanding foreign economic relations, improving the efficiency of import and export activities, contributing to the development and protection of domestic production, guiding consumption and generating revenue for the State budget.
Limitations of import and export tax laws in Vietnam
Besides the advantages of the import-export tax law in Vietnam mentioned above, there are also certain limitations:
Firstly, at present, documents related to import and export tax regulations are still not clear and transparent, businesses are still passive when there is a change in tax, have not identified a specific coordination mechanism between state management agencies and import and export enterprises in the process of carrying out import and export activities.
Second, many regulations on import and export tax rates by classification of goods or by origin make the tariff schedule complicated, leading to many tax rates for the same item.
Import tax includes many taxes such as sales tax, excise tax, value added, so the tax rate is very high. Specific examples are beer from 100-150%, cars from 50%-200%.
Although it is convenient to concentrate, it is not in line with international practices, easily misunderstood as restricting foreign goods imported into Vietnam.
Third, the state promulgates many tax schedules and high and low tax rates will be based on the purpose of use, not the nature of the goods. Therefore, many items with the same properties but different purposes will have a large difference in tax. For example: racing cars (tax rate 5%), ordinary bicycles (70%), 4-seater cars (200%), ambulances (0%)… So many businesses have taken advantage of this to commit commercial fraud and tax evasion.
The most important trick to avoid tax is to lower the value of imported goods to lower the taxable value or reduce the declaration to enjoy a lower tax rate, which has become common with goods with large unit prices and high tax rates such as cars, spirits, etc.
Typically, enterprises that import light trucks but disguise themselves as importing specialized refrigerated vehicles to evade tax from 60% to 10% or tourist cars are fitted with lights and horns to become ambulances for tax refund.
Fourth, when Vietnam joins the WTO, the issue of maintaining export tax barriers will not bring revenue to the State budget. Especially not encouraging export activities.
Therefore, the regulation on export tax rate other than 0% should be considered and amended to suit the international trade and economic situation.
Fifth, the regulations on the payment of import tax on raw materials or auxiliary materials for the production of export goods and the refund of export tax are also limited and unreasonable.
With a tax rate of 30%-40% for shipments of raw materials and auxiliary materials for export production, during the 30-day tax payment period, the production facility will not have enough capital to advance payment of tax, because when the raw materials arrive, the facility has to worry about deploying production for a few months, even some batches lasting up to half a year.
Through the above article, surely readers have understood more about import and export tax in Vietnam, right? If you have any questions, don’t hesitate to ask us a question below this article!